King Digital Entertainment PLC (KING) Gets Lukewarm Analyst Response

Have you crushed all the levels of King Digital Entertainment PLC (NYSE:KING)’s addicting Candy Crush Saga online game? While you have been trying to beat each level, the entertainment company has been working to launch their IPO, unfortunately, receiving only a lukewarm response from analysts. The IPO price was $22.50, but by the end of the first day of trading, the stock was down 16%, which was the worst opening for a U.S.–listed IPO so far this year. Stern Agee analyst Arvind Bhatia initiated coverage of the stock with a HOLD rating, noting the company’s “exceptional run,” but also its slowdown in growth. Arvind pointed out, “the hit title represented 78% of the company’s bookings in Q4, but is tracking 20% below its July 2013 peak.” Even though the company remarked that, “more players have started spending on multiple games, which is helping the company’s revenues,” Arvind is only willing to recommend HOLD King Digital Entertainment.

While King Digital Entertainment PLC (NYSE:KING) might be a unique company surrounded by a cultural craze, Arvind has had a strong history recommending established entertainment companies, including Electronic Arts Inc. (NASDAQ:EA) and GameStop Corp. (NYSE:GME). These successful recommendations have helped earn Arvind a spot as the number 62 analyst out of 2476 analysts, with a +4.2% average return over S&P 500 (INDEXSP:.INX) and a 63% success rate of recommendations.

While Arvind is not quite ready to recommend BUY King Digital Entertainment PLC (NYSE:KING), he was confident enough to recommend BUY Electronic Arts Inc. (NASDAQ:EA) earlier this year in January. Arvind noted, “the company’s third-quarter profit managed to beat expectations despite revenue losses stemming from the shift toward new gaming consoles.” This recommendation has earned Arvind +8.6% over S&P-500.

A few days before his January EA recommendation, Arvind recommended BUY GameStop Corp. (NYSE:GME), despite the company’s warning of lower holiday sales and earnings. Arvind decided to focus on the company’s forecast noting, “30 million consoles by the end of 2014 and 50 million in total by the end of 2015? This is solid news for Microsoft Corporation (NASDAQ:MSFT)’s Xbox One and Sony Corporation (NYSE:SNE) (TYO:6758)’s PS4.” Arvind has already earned + 7.8% over S&P-500 based on this recommendation.

In December of 2013, Arvind earned one of his highest returns recommending BUY EA. Arvind pointed out some of the troubles the company was experiencing, “EA shares are down as the company is having technical issues online which is affecting player experience for Battelfield 4.” And even though the sell through for the game was down more than he had expected at the time, Arvind still recommended BUY, earning +20.8% over S&P-500!

Since 2009, Arvind has only experienced one loss recommending both GME and EA, all the way back in 2011. While many analysts were concerned with the downward trend of packaged video games sales, Arvind remained optimistic, recommending BUY EA. Arvind projected, “software sales growth of at least 10%, led by Modern Warfare, Elder Scrolls, Assassin’s Creed, Uncharted and Saints Row.” However, Arvind ended up with – 34.6% over S&P-500.

Despite this loss, Arvind has performed with a 100% success rate recommending GameStop and an 86% success rate recommending Electronic Arts. To continue following Arvind’s recommendations as King Digital Entertainment PLC (NYSE:KING) pulls away from its IPO and markets new games, download TipRanks and start making informed financial decisions with advice you can trust.